During the boom years in Australia, consultants found themselves in the same situation as mining companies because they were competing for the same pool of professionals. So just like mining companies they found that they had to offer more and more generous salary packages in order to attract and retain suitable candidates.
At the time, whilst there would no doubt have been many conversations about the “silly” salary levels being paid in all parts of the industry, everyone just accepted it as the law of supply and demand in action and got on with the job. There were after all, many clients to service and because everyone's work was “urgent” they could charge (more or less) what they liked.
During this period, we saw a number of smaller consultancies taken over by larger ones. One only needs to look at the number of other consultancies that were subsumed by Coffey during these boom times to see that the focus was on growth. No one was really thinking about the long-term and how these organisations might fare when the inevitable slump came.
As they say, all good things must come to an end and over the last 2 to 3 years we have seen the whole gamut of mining activity; including the service industries, feel the effects of the downturn in commodity prices. Again one only needs to look at Coffey and the painful restructure that they endured when it became apparent that there was no longer sufficient work to sustain the large organisation that they had built up during the boom.
As well as the collapse in commodity prices we are seeing a transformation in the work environment generally towards greater casualisation of work.
The emergence of companies such as Design Crowd; who I used for my logo design, Freelancer and Airtasker are examples of how the Internet is facilitating this casualisation or self-employment/freelancing; depending on your perspective.
Whatever your feelings are about the emergence of this model of working, I believe that it is an unstoppable evolution in the nature of work and will become the norm for an increasing proportion of the workforce. There will always be a role for full-time employees and I believe that they will still comprise the majority of the workforce but how large a percentage this casual/self-employed contingent may represent, is anyone's guess.
So my question is, can this form of employment model work for consultants? In other words might we one day all be logging on to “Mining Crowd” to seek work or find consultants?
There are certainly some out there who are trying to explore this model. In this regard I am thinking of Mineler and Mining Hive, both of which appear to be trying to develop, at least a portion of their sites, as job boards, where potential candidates and potential clients can advertise work or seek someone to do it.
Whilst it is possible that some employers may find employees; either full-time or casual via these sites, I have difficulty in seeing them being used to engage consultants.
The reason that I say this is twofold. Firstly, there is a huge difference between posting a design task and then choosing from all of the designs presented by graphic designers around the world where you can literally see what you are getting, and posting a due diligence task on a website and then having to select from a range of consultant candidates who may, or may not have the requisite skills to complete the task satisfactorily.
Secondly the industry is small and generally conservative. We tend to make decisions regarding who we will have work on our projects based on recommendations or past experience. From my experience as a client, I know that there are certain consultants that I would go back to time and again because I knew the quality of their work and new that they would deliver what I needed at what was an acceptable price. On the same basis, there are consultancies that I will never use again.
Whilst there may be a financial appeal to using an Internet-based tender to say, find someone to do a due diligence on a mine in Lapland at the lowest possible cost. This work would logically be won by someone located in Finland. However, the financial consequences of bad advice provided by somebody whose qualifications and experience do not match their CV, are so great, that I believe most companies would prefer to engage someone; at a higher cost, from a better-known consultancy in order to be certain of the quality of the final report.
Yes I am sure that greater confidence could be gained in a potential consultants capabilities through ratings and testimonials from previous clients, in the same way eBay has its feedback rating, but I believe that for most companies, trusting this “weight of evidence” approach, would still be a big leap of faith and one that most would not take.
There may however be a middle ground that provides the level of professional competence sought by clients, at a reasonable cost, without the major consultancies burdening themselves with additional staff for whom they may struggle to find sufficient work.
The model I am suggesting is one where loose associations of consultants agree that they will work together from time to time under the auspices of a larger, and better-known consultancy. The associations will be formed on the basis of previous working relationships. In other words everyone knows one another and will have worked together at some point in the past and are therefore confident in the professional capabilities of the associated parties.
Each associate in this group will keep their overheads as low as possible, many working from home or from shared offices, enabling them to keep their rates at an acceptable level.
When a project presents, these loose associations come together as subcontractors to the larger organisation working under their banner, but once the project is complete they disband and pursue their own activities, possibly including being part of other associated groups. In many respects it mirrors the structure of "expert teams", which are used extensively in US military research establishments.
It is perhaps not an original model, in as much as some large consultancies have used associates in the past to supplement their permanent workforce at peak times. A far better strategy, in my opinion, than simply building a bigger organisation through acquisition. Therefore I believe that this business model can and will be successful in the new, more austere mining environment because the larger consultancies are now smaller than they once were and may be cautious about overstretching themselves as the green shoots emerge.